Social Security disability may run dry by '17

Published 12:00 am, Tuesday, August 23, 2011

WASHINGTON -- Laid-off workers and aging baby boomers are flooding Social Security's disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency.

Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs and can't find new ones in an economy that has shed nearly 7 million jobs.

The stampede for benefits is adding to a growing backlog of applicants -- many wait two years or more before their cases are resolved -- and worsening the financial problems of a program that's been running in the red for years.

New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the program unable to pay full benefits, unless Congress acts.

About two decades later, Social Security's much larger retirement fund is projected to run dry, too, leaving it unable to pay full benefits as well.

Much of the focus in Washington has been on fixing Social Security's retirement system. Proposals range from raising the retirement age to means-testing benefits for wealthy retirees.

But the disability system is in much worse shape and its problems defy easy solutions.

The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994. If Congress does not act, the disability program will collect only enough payroll taxes to pay about 85 percent of benefits after the trust fund is exhausted in 2017.

Even if Congress does act, the combined retirement and disability trust funds are projected to run out of money in 2036, the trustees say.

The new congressional report estimates the combined fund would run out of money in 2038. Claims for disability benefits typically increase in a bad economy because many disabled people get laid off and can't find a new job.

This year, about 3.3 million people are expected to apply for federal disability benefits.

That's 700,000 more than in 2008 and 1 million more than a decade ago.